If a company director / sole shareholder does not extract any dividends or salary from the company - are they still required to submit / file any returns to HMRC?
Just reading these posts, and wonder whether you are meaning does the company still need to file/submit any returns? If they have a PAYE scheme set up, yes they will. And obviously the normal returns to companies house.
Nick & Tim have both replied assuming you are asking whether the individual needs to submit anything for him/her personally, which may well be what you are asking!
Yes, thanks Helen - i jumped to a conclusion there and I should have said there may be reasons other than income that he would wish to complete a personal Return.
The same might go for Corporation Tax Returns and, as you say, Companies House. Tim
Hello I am new to this network and forum but wanted to raise a few points that I think might be of help.
(1) a director is also an employee so irrespective of whether they receive any pay or not the Ltd co (employer) should have a PAYE scheme and as such a nil P35 notification would be required for each payroll year. (very simple to do - see HMRC web site).
(2) the Ltd company will have to make annual returns to companies house.
So apart from the points already raised by the other posts I just wanted to warn that there are still requirements other than the self assessment tax return.
(1) a director is also an employee so irrespective of whether they receive any pay or not the Ltd co (employer) should have a PAYE scheme and as such a nil P35 notification would be required for each payroll year. (very simple to do - see HMRC web site).
That is mistaken. A director is not necessarily an employee and not every limited company is an employer. A company that does not employ anyone is not required to register as an employer, and in such a case a nil P35 would not be required.
-- Edited by Tom McClelland on Saturday 17th of December 2011 04:27:23 PM
Yes, Tom. I used to find it annoying when new PAYE Scheme bumph landed on the doormat whenever a company was formed, even if it never started trading. Tim
surely that's not correct. Directors are responsible for telling HMRC that they are directors and that they need to fill n a self assessment return regardless as to whether HMRC have contacted them to tell them that they need to fill in a return.
From the list on the HMRC website of who must fill in a return :
a company director (unless you're a director of a non-profit organisation, for example a charity, and don't receive any payments or benefits)
The line seems quite clear that the exception is for non profit's only. Non profit making enterprises (regardless as to whether or not a profit was actually returned) that haven't paid the director.
I know that I fill out self assessment returns for directors who have had no company income or dividends or expense items during the year.
kind regards,
Shaun.
P.S. editied to emphasise the word AND in the quote as that seems particularly important.
-- Edited by Shamus on Sunday 18th of December 2011 01:07:33 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The line seems quite clear that the exception is for non profit's only. Non profit making enterprises (regardless as to whether or not a profit was actually returned) that haven't paid the director.
-- Edited by Shamus on Sunday 18th of December 2011 01:07:33 PM
I have it on reasonably good authority (ie a respected chartered accountant who I've never known to be wrong about anything to do with the law relating to accountancy) that that particular advice on HMRC's website is basically just "made up" by whoever wrote the copy for that page, and not backed up by the force of any regulation whatsoever. Apparently what the actual regulations say is that there is no requirement for co director to do SA unless either (a) they're sent an SA form by HMRC or (b) their earnings circumstances are such that they need to be on SA anyway (eg multiple earnings sources and above higher rate threshold).
Now you may know different, in which case I lack the knowledge or authority to argue with you, but it wouldn't be the only instance of wrong advice on HMRC's pages that I've ever come across.
I think that we've all come accross contradictory information on the HMRC web pages before (IR35 and travel/subsistence are veritable treasuries of contradiction). Generally all that we can do is believe what is written in black and write unless contradicted by something that takes precedence.
What hope do we poor mortals have if we cannot quote the HMRC website for matters relating to tax!
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Looks like a good call from Tom and Nick there. I haven't got the Act but this is from a well-known annual tax manual.
S7 TMA ..............Notification is not required .... a. does not pay higher rate tax and has received : - income under deduction of tax; or - distributions from UK companies; or b. has made no capital gains in the tax year in question and all his income falls within the following categories: - income taxed under PAYE - income from a source not taxable under self-assessment
I don't remember reading that before Na, so I beg your pardon.
What hope do we poor mortals have if we cannot quote the HMRC website for matters relating to tax!
That's exactly what I said to the accountant who told me this. And he replied that's why he's a professional accountant and I'm not.
I've had (friendly) arguments with the payroll accreditation section before, in arcane cases where we felt that 12Pay software exactly matched the software specification issued by HMRC, but the regulations say something different. In such cases we should ignore HMRC's specification and code to the regulations, which of course we've never seen and probably wouldn't understand if we did see them.
Tom McClelland wrote:That's exactly what I said to the accountant who told me this. And he replied that's why he's a professional accountant and I'm not.
Hi Tom,
That would have been the line where I would have told the accountant to pick a window! (trust me, been there, done that!).
If accountants knew everything then chartered's would not argue with each other on accountingweb and 50% would not be the pass mark in the exams.
Don't get me wrong, I'm anything but anti chartered (espechially as that's where I'm attempting to get to via chartered certified) but I do take umbridge at the arrogance of some (not all) of their number.
In some ways the arrogance can be seen as a defence mechanism as people are normally (myself excluded!) less willing to argue with someone who sounds as though they know what they are talking about... I've probably been guilty of that one more than a few times myself !!!
If HMRC publish on their website a tax treatment and you adhere to it then that is a defence should they later turn around and say, but that's not what we meant.
Also, where others have been dependant upon published information the fact that writing the page was given to the office junior to complete is no defence for incompetence on their part.
Any court would throw out a defence based on such a premise.
I'm not saying that your accountant is wrong. In fact I believe that they are correct. What I am saying is that the accountants dismissal of your (and my) arguement about placing dependance upon information published by HMRC is incorrect insofar as if one followed the HMRC website instructions that is a defence in itself.
Conversely, to not follow the direct instructions or guidance published on the HMRC website as you believe them to be wrong is a dangerous and potentially costly stance to take (either fom the HMRC or via accountancy fee's in your accountant argueing the corner that they put you in).
My personal stance is that if HMRC tell me that they want X then that's what I will give them. I've got more than enough problems argueing with clients who think that tax is something you pay if you don't have a finance professional working for you to add argueing with HMRC to my list of headaches.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I have just got off the telephone from HMRC, who have confirmed that you do not need to submit a self-assessment return as a director if you are not drawing a salary or dividends from the company unless the company is a registered charity - for which the rules differ.
